Cloud computing is the latest term for utility or grid-based IT computing, models in which organisations outsource their infrastructure to a service provider, which provides access to on-demand computing resources over the internet on a utility basis.
Salesforce.com is the US$1 billion pioneer of the SaaS (software as a service) model, which sees applications rented on a utility basis over the internet.
Coffee, Salesforce.com's director of platform research, said there are a number of myths holding back an inevitable migration to cloud computing.
These myths include the notion that the only benefits of the model are around cost, that there are some applications that should always remain on-premise, and that cloud computing involves more risk than deploying in-house.
Cloud is a game changer
Coffee told iTnews that the cloud represents a "qualitative change" to the way organisations do business, not just a quicker or easier way of doing IT.
"It is not just about something being cheaper, or that something that used to take ten hours now taking ten seconds," he said. "It is about a fundamental change to business processes."
Cloud computing is different, he said, because it offers near infinite scale and flexibility.
With the cost of capital high in the face of the credit crisis, IT infrastructure investments can be a "limiting factor on growth," he said. Investing in a new project has inherent risks.
With cloud computing, however, hardware and other infrastructure costs can be removed from those risk equations.
"The cost of one failed project is negligible," he said. "Say you try 10 projects and nine of them fail. In the cloud, you kill the nine without mercy. It doesn't cost you anything more. But you take the one successful project and you grow it as quickly as the market conditions demand. In the cloud, the cost of failures become insignificant compared to the success of a project."
"That's the beauty of the cloud - it is massively scalable if it works, instantly killable if it doesn't," he said.
"In the cloud, your OpEx [operating expenditure] is clearly coupled to business value. It allows for strategic accounting - focusing your investment in the right places now rather than retrospective accounting around what you did last quarter."
Coffee uses the example of 18-month old start-up Animoto, which takes a consumer's pictures and music and turns them into video presentations - an application it hosts using Amazon's online storage offering.
Animoto was serving video to around 5,000 users per day, until a wildly successful viral marketing campaign in April 2008 saw 750,000 people sign up to the service in a three-day period.
"Within 72 hours, they went from requiring 50 virtual servers to requiring 3,500 virtual servers," Coffee noted. "If they weren't doing that in the cloud, even on a seemingly unlimited budget, there would still be no time to purchase, install and configure this many servers. Whereas in the cloud they only had to swipe a credit card."
"It's not an infinite resource but it is as infinite as it needs to be."
It is this scale and flexibility, Coffee suggests, which might "fundamentally scare older-style companies."
"Two guys in Bangalore on a laptop might be your next biggest competitor," he said. "They could be providing services to the global 2000 within two months."
With cloud computing, an organisation's "crown jewels" will no longer infrastructure but "business ideas" and "business value," he said.